We present a model for development of orientation selectivity in layer IV simple cells. Receptive field (RF) development in the model, is determined by diffusive cooperation and resource limited competition guided axonal growth and retraction in geniculocortical pathway. The simulated cortical RFs resemble experimental RFs. The receptive field model is incorporated in a three-layer visual pathway model consisting of retina, LGN and cortex. We have studied the effect of activity dependent synaptic scaling on orientation tuning of cortical cells. The mean value of hwhh (half width at half the height of maximum response) in simulated cortical cells is 58 degrees when we consider only the linear excitatory contribution from LGN. We observe a mean improvement of 22.8 degrees in tuning response due to the non-linear spiking mechanisms that include effects of threshold voltage and synaptic scaling factor.